Johnson Company's Power Plant Provides Electricity to Two Producing Departments $\begin{array} { l } \text { Budgeted fixed costs}&\$500,000 \\\text { Budgeted variable costs per kilowatt hour}&\$1 \\\end{array}$

Johnson Company's power plant provides electricity to two producing departments.The annual budget for the power plant shows the following:
$\begin{array} { l } \text { Budgeted fixed costs}&\$500,000 \\\text { Budgeted variable costs per kilowatt hour}&\$1 \\\end{array}$

Actual annual costs incurred by the power plant were:
$\begin{array} { l } \text {Actual fixed costs }&\$215,000\\ \text { Actual variable costs}&\$350,000 \\\end{array}$

Additional annual data follows:
$\begin{array} { l }&\text { Poducing Department } 1&\text { Poducing Department } 2\\\text { Capacity available }&250,000 \text { kilowatt hours }&150,000 \text { kilowatt hours }\\\text { Capacity used }&270,000 \text { kilowatt hours }&165,000 \text { kilowatt hours }\end{array}$

Required:
A) Compute the amount of fixed costs allocated to each producing department.
B) Compute the amount of variable costs allocated to each producing department.

Correct Answer:

Verified

A)$250,000/$400,000 × $500,000 = $312,50...

View Answer

Unlock this answer now
Get Access to more Verified Answers free of charge

View Full Answer For Free